THE ISSUES OF LABOR MARKET IN PAKISTAN

The evolution of economies is viewed by observing the changes in

assorted markets. Hence markets serve as indexes where the related variables
interact to alter the over all scenario. And whilst dealing with issues of any
specific market be it goods, money or labor market, the exogenous factors on
which the market is dependant upon must be properly registered and accounted
for.
Labor is a wage earning agent who provides his services (physical or
mental) by utilizing time to produce work while market is the place where
exchange of goods and services takes place as a result of buyers and sellers
being in contact with one another, either directly or through mediating agents or
institutions. When we talk about labor market, we are talking about the human
market or putting more appropriately in economical terms as the human capital.
Unlike pre industrial times the advancements in technology have resulted in
growth in trade and manufactures globally. To administer and serve the current
phase of activities it requires centralized sites of production, distribution,
management, exchange and credit. And all this calls for efficiently grouped and
directed human capital in terms of skills, aptitudes, techniques and focus.
Consequently, as a result of dealing with the essential features of labor
market one is faced with issues that vary on the basis of national economies
because of socio-economic differences e.g. geography, culture, local trends, and
gender bias of a particular region. The economy of Pakistan in the present state
of affairs is concerned with the following issues in the active labor market as well
as at macro and micro level.
EDUCATION

Vocational training
Focused learning

Career guidance and counseling

Scholarly aptitudes

ORGANIZATION OF HUMAN CAPITAL

Balance of inputs (work efforts and skills) and outputs (privileges and
facilities)
Wage structures should be based on performing how well a job rather than
performing what job
Relationship of human capital and productivity

EFFECTING LABOR MARKET EFFICIENCY

Improvement in the techniques of labor supply in the market

Corresponding individual skills with the market demand

Facilitating labor market entry

Improving labor market information

Facilitating job searches

ESTABLISHING TECHNOLOGICAL SUSTAINABILITY

Need to upgrade the industrial sector

Need to inculcate higher technology

Need to advance manufacturing sector

UNEMPLOYMENT AND UNDEREMPLOYMENT TRENDS

Jobless growth parity

Working poor

Youth unemployment

With drawl (through increased absenteeism, mental withdrawal or quitting)

MACRO ECONOMIC ISSUES

Trade liberalization

EDUCATION
A large number of unemployment in Pakistan comprises of the educated
masses. Although the dilemma of individuals who are highly educated but

unemployed can be found around the world, the condition in Pakistan is terrible.
In 1994, nearly half of the unemployed in Pakistan were educated. This form of
unemployment proves to be more expensive for the state because it wastes the
educational dollars that comprise of 91% subsidy to the higher education from
where only 9% is being recovered through tuition fees.
About 323,000 students pass the matriculation exam yearly. Out of these
students, it is estimated that over half will choose post-secondary education and
only 20 percent will seek vocational training or business education. As for those
who enter the job market right after high school, studies indicate that only twothirds of them are able to find jobs, while the rest continue to be unemployed. In
addition, 20,000 to 30,000 intermediate-level students fail to find jobs each year.
Because of the subsidized education students find it easy to enroll for high
degree programmers. But by the end of the completion of degree most remain
underemployed as the learning acquired and the demands of the actual labor
market are completely mismatched. So what one finds mostly is a person doing a
job which is far off from the education which he acquired .
The mismatch in skills is due to the lack of vocational and technical
training during the education period whereas too much stress is laid on abstract
learning. The designing of curriculums is more done in a general sense rather
than focusing what challenges these graduates will face in the active market.
Nonetheless, even in case of technical training faculties, the skills taught
are very much deficient. One example is in the sciences. Only one-quarter of
matriculating students pursue further education in science. Among those who
decide to pursue a career in engineering, the only option the Pakistani
Universities of Engineering and Technology make available is a Bachelor's of
Science in engineering. That means these schools act as engineering colleges
rather than universities, by churning out graduates with a bachelor's degree level
education and completely ignoring post-graduate training .
To worsen off the state of affairs, there is too much emphasis on
archetypal fields like civil, mechanical and electrical, computer and software
engineering with less emphasis on the dire need of experts in fields of
biotechnology, aerospace and advanced medical research which can offer more
opportunities bright and willing students who have the interest and intelligence to
succeed in such fields.
When it comes to the field of social sciences, we hold the general
misconception that research and quality work is being done in this area. But what
actually is being produced is the duplication and repetition of previously done
study cases. Most importantly people find no such need of serious research in
the area of social sciences because all the degree accounts for is hunt for a job

or promotion. So, as far as higher education is concerned, only those students

should be prompted to secure higher degree programs which hold scholarly
aptitude and are focused in the areas of research.

ORGANIZATION OF HUMAN CAPITAL

A somewhat familiar notion is held about treating every individual equally
by treating him differently. We know that every unit of labor differs in efficiency
and skill. Hence the way all units of labor are grouped and administered is the
key to effective production. Because labor force is an asset which if adequately
managed can prove to be an effectual tool in the growth and development of
economy, be it at micro or macro level. Following pace might be adopted to
administer the work force efficiently:

Aptitude building training

Skill specialization
Fragmenting work force into divisions and providing opportunities of
specialization to each division
Development of learning centers
Frequent workshops to keep work force acquainted with recent trends
Area profile development
Public Debates Dialogues and courses

EFFECTING LABOR MARKET EFFICIENCY

Rapid globalization and liberalization, and the resulting need to enhance
international competitiveness, have led to increasing emphasis on human
resource development (HRD) throughout the Asian region. Knowledge-based
investment has become a priority equal to that of creating physical capital.
Increasing investment in HRD seeks to ensure a greater stake for the labor force
in the process of development by enhancing its capacity for productive work.
Thus, a synergetic process is involved whereby a better fed, educated and
trained and more productive workforce contributes to greater growth and
receives commensurate returns from growth.
In most cases there is a breach between labor supply and labor demand in the
market. Most of the job openings fail to recruit literal employs because of
inefficient communiqu with the people seeking jobs

ESTABLISHING TECHNOLOGICAL SUSTAINABILITY

The technological advancement in every arena of todays age has taken
the global market through sudden boom. But in order to catch up with the shift in

production and distribution methods, all markets need to draw level with
changing trends so as to meet the requirements of comparative advantage. In
this mater, Pakistan is an economy passing through a transient phase. In order to
industrialize further it needs to alternate its labor intensive and were
technological strategy.

UNEMPLOYMENT AND UNDEREMPLOYMENT TRENDS

Most of the labor employed in Pakistan is underemployed or unemployed

MACRO ECONOMIC ISSUES

Increasing globalization and cross-border production has been essential in
enhancing international competitiveness. In case of East and South-East Asian
economies a trade and industry drive is created because of increasing
investment patterns of multi-nationals and huge numbers of Asian companies
resulting in production and development across borders. Economic restructuring
in terms of trade liberalization, has led to higher investment and trade flows. The
economies in transition are advancing from a controlled to a market-driven
system by opening up to foreign investment and introducing measures to control
and privatize major sectors of the economy in an attempt to build on their
comparative advantage. It is generally accepted that in order to achieve
international competitiveness high rate of investment, macroeconomic stability
and an export-oriented policy regime is required. Ensuring a high rate of
investment requires political and social stability, policies that encourage high
savings, and confidence in the economy. At the same time, responsible
macroeconomic management, mostly achieving low inflation and an appropriate
exchange rate will push long-term planning and investment.
In Pakistans case the constitutional and political scenario is the biggest hurdle in
promoting growth and investment by keeping at bay the foreign investors. The
lack of proper law enforcement and uncertainty with patent and rights securities
is major problem as well.

Letter to the Editor (July 14, 2007-DAWN)

http://www.dawn.com/2007/07/14/letted.htm#4
Blog post
http://00amna.blogspot.com/
Islamic banking
IN his letter, Islamic banking (July 1), SBP chief spokesman Syed Wasimuddin
mentioned: Under Islamic banking, profits earned on financing and investments are
shared with investment account holders. Islamic banks often at their own discretion pass
on their own share of profit to the depositors in case a particular pool of investment could
not yield expected profits.
The question arises that what exactly is the nature of these financings and
investments?
Under Islamic economics, we focus on the transaction of goods, service or time-held
usage of a property, asset against money. What is prohibited is interest.
Second, Islamic investment in practice is on the whole modarba-based meaning one can
only contribute or define when to trade or not to trade. But while a person invests in a
bank, he never knows about the operations of that bank, where they are investing and
such like.
The earning of an Islamic bank is supposedly through participation in real economic
activities and businesses. For the sake of clarity, the bank should provide the customer
with a clear idea of what the business is about and in which direction his funds are going
to be invested. The fluctuation in profits received by investors does not validate the
process as Islamic banking. The ventures generating these profits shall be deliberated
over.

Now back to the original question, whether what is being offered as an implementation of
Islamic banking meets the obligation of the concept itself or not? As stated by Mr
Wasimuddin, the profits are earned on the basis of finances and investments. Since the
majority of investments and financings existing in Pakistan are in the form of fixed
income bonds, mutual funds and bank assurance products, etc., these generate profits in
the form of interest in one way or other. Hence, how close our Islamic banking is in
compliance with Shariah is still a probable issue.
AMNA MASOOD
Islamabad